Comparing Commercial and Open Source Licenses

This page discusses the essential characteristics of commercial product software licenses and compares these with the two very different types of open source licenses: the GNU General Public License (GPL) and Berkeley Standard Distribution (BSD) type licenses.

This web page does not constitute legal advice. If you need legal advice regarding software licenses or copyright, you should consult with a lawyer.

Software is most frequently distributed under one of three broad types of licenses. Commercial software licenses are often complex and vary greatly in their terms. The GPL license is complex and there are a couple of versions with minor variations but it's highly standardized. BSD licenses are short and simple.

Any specific product may have it's own unique license that does not fit any of the common patterns. Individual authors are free to place almost any imaginable and sometimes bizarre license restrictions on the use of their software that they choose; some have. Persons installing a product need too read and understand what the license allows and does not. For commercial licenses and any other that is not a GPL license and not a simple BSD type license, watch for words and clauses that make the use of the product inappropriate. A change of a word or two can completely change the meaning of a license. For licenses that don't fit within the common types, there are just too many variations to even try to discuss. Opensource.org lists 21 Approved Licenses. These are just the "standard" or common ones that are OSI certified as valid open source licenses.

Nearly everyone is familiar with commercial software licenses. The user pays a fee to obtain a license to use the software and the license defines with some degree of precision the terms and conditions under which the user may and may not use the software. The terms may be simple or complex, liberal or highly restrictive. Most often these licenses limit use to one user or computer per license, allow or disallow network access and set conditions if any network access is allowed. A commercial license may allow the same software to be used on a desktop and laptop or business and home computer if it's not used at the same time; this is entirely up to the vendor or software author. All commercial licenses, that are competently drafted, include a clause that the user forfeits any right to use the software if they violate any of the license terms.

As discussed here, shareware licenses are unquestionably commercial licenses. They differ from shrink wrap licenses in allowing a user to try a product for some limited time before paying for it. A few may allow free use at home or for non business or non profit use and require payment for use in a business environment. Shareware licenses also typically allow additional distribution provided certain conditions are met.

From the outside, the open source movement is often seen as a single phenomena with common goals. In fact, there are two fundamentally different approaches to open source and the associated software licenses, that are as different from each other as they are both different from commercial software licenses. The better know variation is the GNU General Public License (GPL) under which Linux is distributed. See http://www.gnu.org/copyleft/gpl.html for the exact wording.

The GPL uses copyright and contract law (licenses) to enforce a result that is essentially the opposite ("copyleft") of what copyright law is normally used to protect, private intellectual property rights. The GPL allows a software author to insure that no individual or entity derives private benefit from the author's efforts without returning that benefit to the public.

The GPL is more complex than most commercial licenses. It starts by defining free not as related to price but rather the right to have source code for software and the freedom to use it and modify it in almost any way, except deny anyone else the right to have and also use freely any software derived from or based on software covered by the GPL. You cannot use GPL licensed software as a starting point to create any commercial (proprietary) product and you cannot mix together software covered by the GPL with software covered by other incompatible licenses to create new products. You may use (compile, install, execute the binary version or run scripts) GPL licensed software pretty much without limitation provided you don't modify or redistribute it.

The complexity of the GPL is illustrated by the question of whether or not a company may modify GPL software for internal only use and keep such changes private. On the introductory page, What Is Copyleft?, GNU.org begins by saying "Copyleft is a general method for making a program free software and requiring all modified and extended versions of the program to be free software as well." The GPL license itself includes the following from the preamble: "Our General Public Licenses are designed to make sure . . . that you can change the software or use pieces of it in new free programs;" Note the "free" qualification of programs. Clause 2 includes "You may modify your copy or copies of the Program or any portion of it, thus forming a work based on the Program, and copy and distribute such modifications or work under the terms of Section 1 above, provided . . ." Clause 4 states "You may not copy, modify, sublicense, or distribute the Program except as expressly provided under this License. Any attempt otherwise to copy, modify, sublicense or distribute the Program is void, and will automatically terminate your rights under this License." Note the term expressly. There certainly is nothing in the license that says or suggests anything along the lines of "You may modify copies of the Program for internal use only."

In Frequently Asked Questions about the GNU GPL one question is "Does the GPL require that source code of modified versions be posted to the public?" The provided answer states "The GPL does not require you to release your modified version. You are free to make modifications and use them privately, without ever releasing them." "use them privately" is not defined and should not be construed to be synonymous with either "use them internally" or that any use that avoids distribution or release is allowed.

For example, suppose a GPL covered web forum software package is used on a commercial site. While the package allows a lot of customization, the results are still recognizable to those familiar with the package. The company decides some enhancements are necessary but cannot be made without changing the source code on which the product is based. They make the changes, which add new visual features to the web site. Is this private? It's internal use as companies typically think about such things but I can think of no reasonable definition by which this is private. Further, if the web site and the software runs on multiple servers, does this count as distribution?

What about modifying Linux, a GPL OS, for use on company web servers. It's much less visible but not fundamentally different. It's not private and probably constitutes distribution if multiple servers are involved. What about a large company modifying Linux for use as a desktop OS? Probably not private and almost certainly distribution; their is nothing in the GPL that recognizes multiple computers in one company as different than other separate computers. Clause 4 is clear that if it's not "expressly" allowed by the license, it's not allowed.

About the only unequivocally private modification that can be made to GPL licensed software, is for an individual programmer, working at home, to experiment in isolation. As soon as he or she starts to show it to others it becomes a gray area. This of course assumes that you accept the term "private" in the FAQ as a valid interpretation of the acutal license language which is the only thing that matters. Simply put, if use is private, an author and copyright owner of GPL licensed software will never learn of its use and if they do it's very unlikely that the use will reasonably qualify as private. Certainly, if the result is to be passed on to a friend, the GPL conditions must be met.

Thus, it's a mistake for a business to think they could start with Linux and enhance it in proprietary ways. Any competitive advantages the modifications might yield could be lost because they might not legally be kept secret and competitors would be free to use them. A company may create original proprietary products that run on Linux but that's a very different issue. No smart company will make plans that depend on answers to questions that can only be definitively answered in a court of law.

Because few businesses are willing to invest resources in efforts that their direct competitors may use without compensation, the GPL is fundamentally anti-commercial. A business that finds GPL licensed software that it would like to modify for use in it's operations has several choices. It may decide the contemplated changes are of such a nature that it's competitors won't actually benefit from them but must recognize that competitors may still be able to derive useful business intelligence from the changes as they may need to be made public. It can search for similar software that is available under the much more liberal and business friendly BSD licenses; there may not be any. It can develop new software from scratch but then it gains no material benefit from the GPL product, except possibly some basic ideas that may not otherwise have been thought of.

The GPL does allow charging fees for support services or warrantee services. Thus you could make a hardened version of Linux for use as a dedicated firewall and sell installation and support services. You could charge for a warranted version of the firewall but either way you'd also have to make the entire firewall package including modified source code, free (except distribution charges) for the taking for anyone who was willing to accept it without warrantee. Absence of any warrantee is one of the key components of the GPL.

The other family of open source licenses are those based on Berkeley Standard Distribution (BSD) license. For examples see http://openbsd.org/policy.html and http://www.freebsd.org/copyright/freebsd-license.html. These licenses are very short and simple. Where the GPL prevents future private use of modified GPL licensed software, BSD type licenses assure this right. They even allow future binary only, i.e., no source, commercial products to be made from BSD licensed software. The only restriction is that the copyright / license notice and warrantee disclaimer of the original be included in derived products.

The BSD licenses are fundamentally business friendly. They allow anyone to use and modify source and, if it is not redistributed, i.e., enhanced for internal use only, no one needs to be told what it's based on or how it's modified. You can even make commercial products for redistribution from BSD licensed software, as are some firewalls and network security products based on OpenBSD.

All the open source BSD systems, all of which have BSD style licenses, are distributed with GPL licensed utilities and development products. Both the GPL and BSD style licenses allow software with different licensing to be distributed together. What you can't do with either, is mix code with one type of license with code from the other type, to create a single product. The BSD license does not allow restrictions that the GPL license requires. Anyone making a commercial product derived from BSD licensed code and distributed in executable (binary) form only, must be careful to insure their product includes no GPL covered components.

The BSD license does not include a termination clause that covers violations of the terms of the license.

It's important for anyone considering the modification of open source software in a commercial situation or planning to distrubute such software, to understand the differences. There is nothing in GPL that says at what point modifications need to be made available. It's obviously neither possible or desirable to distribute source code every time a line is changed. At the point any distribution or public use of derived products begins, the source should be publicly available.

The consequences for a business that builds a mission critical e-commerce and web site on open source software, without paying careful attention to the licenses, could be disastrous. Using GPL software as a starting point could result in a business being forced to disclose information that they wish to keep private and possibly losing the right to use the resulting product. Answering what happens when someone violates the GPL but subsequently complies with it, probably requires a lawyer and negotiations with the original copyright holder. Combining GPL and BSD source into a new product could result in software that cannot be legally used. (Review clause 7, second sentence, of the GPL and compare it to the first line of the BSD licenses.)

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